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Facebook Inc.'s New Like Button -- a Big Catalyst

By Daniel Sparks - Feb 26, 2016 at 11:05AM

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Here's why investors should be happy about the social network's overhauled Like button.

Initial tests in Spain and Ireland apparently went well; Facebook's (META 7.19%) overhauled like button is now moving from beta testing to a global rollout. Here's what the new like button looks like and why it is important.

Introducing Reactions
If you haven't already noticed it in your News Feed, here's a rundown on the new button. The upgraded Like button, called Reactions, is more of an extension of the Like button we all know than it is a replacement. Facebook users can now choose between five different emojis, or select the traditional thumbs up. Options for Facebook users to select when engaging with a post now include Like, Love, Haha, Wow, Sad, or Angry.

Reactions. Image source: Facebook.

The Like button is still displayed prominently by default. By simply clicking on the Like button, users can engage with a post using the traditional thumbs up. But users can hold down the Like button on mobile or hover over it on the web to view and choose from the five new emojis.

"Today, we're excited to offer it to everyone who uses Facebook around the world," Facebook said in a statement on Wednesday. "We will continue learning and listening to feedback to make sure we have a set of reactions that will be useful for everyone. We hope you enjoy the new Reactions!"

Why it matters
The new button is important for two key reasons.

First, the rollout of Reactions puts Facebook right smack in the middle of an undeniable emoji craze. And, from the looks of it, this craze looks like its here to stay. Consider some of these findings from a recent poll by textPlus -- a messaging service that supports use of emojis -- which surveyed some of its users.

Almost 100% of users between ages 13 and 24 are using emojis regularly.

A third of users said they would text less if emojis couldn't be used.

Nearly half of respondents said they would send an emoji to a co-worker or boss.

Second, Reactions will give Facebook more detailed data on its users. This will serve two primary purposes: It will improve the relevance of posts for users and Facebook will eventually be able to offer better targeted ad products to advertisers.

Any data gained from the new like button initially, however, probably won't be game-changing. Facebook said on Wednesday it will first treat all types of Reactions the same when collecting data on users. But this will change soon.

In the beginning, it won't matter if someone likes, "wows" or "sads" a post -- we will initially use any Reaction similar to a Like to infer that you want to see more of that type of content. Over time we hope to learn how the different Reactions should be weighted differently by News Feed to do a better job of showing everyone the stories they most want to see.

Look for updates from Facebook throughout the year on how Reactions is impacting the business. Given that the Like button is the primary way users engage with the social network, the overhauled button will likely have a meaningful impact. And in light of the growing use of emojis and the more detailed data the new Like button will give Facebook, the impact on the company will likely be very positive.

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